Joined: This month
Posts: 391
Lot of incorrect information so far
7/17/2015 at 3:10 PM
There isn't a company or a bank that is better than another. It is all going to come down to the person you are dealing with. And you have to have at least a basic understanding of how the system works.
1. RRSP isn't something you buy. It is a designation you give to an investment. An RRSP can be a GIC, investment in a mutual fund or group of mutual funds, stocks, etc.
2. Banks vs Investment Brokers (ie BMO, Royal Bank, Credit Union vs. Edward Jones, Investors Group, etc.). The only additional value you get from one over the other depends on the knowledge, experience, integrity and dedication of the person you end up dealing with. I've had my investments with brokers, and had an awesome one until he semi-retired and moved away. I then had a series of crappy ones who gave me poor advice, invested my money in a way that gave him an upfront payout of his commissions, but then locked my money in and when I wanted to transfer it out because I was unsatisfied with his work, it cost me a few thousand extra to get my money out. I took it to the bank where I had a great investment person who did a great job. But then they got transferred/promoted and the person I ended up with was certainly enthusiastic, but didn't know much more about the investment options than I did. The investment broker may or may not be able to get you a higher return (brokers and banks have access to most of the same mutual funds, which is the most common investment type for RRSPs), but their fees are usually higher in order to pay the broker. So if the broker can get you 6% return and the fees on the funds you invest in are 2%, and the bank can get you 5% but the fees are 0.5%, you're better off with the bank. But that is just an example, and the returns will be earned by the investments, so you never know where that is going to go.
3. Understanding what's in it for the person helping you. Banker vs broker, both have pros and cons:
Broker Pros: this is their income and everything they are dedicated to. If they do a good job and build a large book of business, they can make a lot of money. If they are good at what they do and take care of their clients and their money, then they get paid very well.
Broker Cons: they are salesman, and if you don't invest, they don't make money. Just like any profession, there are many good ones and some bad ones who are either struggling to build their business, or are just lazy and just want to get you to buy so they get paid. If they have been in business a long time, they may not pay much attention to a "small fish" who is just starting out and isn't investing much. Not to say they are all like that, the guy I first had was very experienced and gave me great service, even though I didn't start out with much.
Banker Pros: they are not influenced by where you invest your money. Some mutual funds pay higher commissions, so an unethical broker may guide you to these funds so they get paid more.
Banker Cons: they don't have any skin in the game. They get paid no matter what you do with your money. There may be bonuses for performance, but their compensation isn't greatly affected by your investment choices.
If you are looking for someone to help you with your investments, talk to others that are already dealing with someone. If you're younger, talk to your parents, your parents' friends, trusted coworkers, acquaintances, etc. If you don't have a lot to invest right away, go to your bank and talk to their investment person, or if you have a recommendation of a good broker, set up an appointment with them). You can set up a small, regular contribution (do a small amount every payday, you won't even miss it) into a fund that has small management fees, and discuss the options that you have if you ever need to get your money out. Ask about front-loaded vs back-loaded investments (has to do with the fees that get paid out to whoever sold you the investment).
Do some research, ask around, and good luck!